Feb. 15 (Bloomberg) -- Flinders Mines Ltd., owner of the Pilbara Iron Ore Project in Western Australia, won initial court approval for its plan to sell itself to Russia’s OAO Magnitogorsk Iron & Steel for A$553 million ($592 million).
Australian Federal Court Judge Paul Finn today in Sydney approved the plan, pending a shareholder vote and a final hearing on April 3 in federal court in Adelaide.
The sale to MMK, as Magnitogorsk is known, is “very conventional” Finn said, adding that he had “absolutely no difficulty in approving it.” MMK is controlled by billionaire Victor Rashnikov.
The acquisition will give MMK ownership of 917.3 million metric tons of iron ore resources, according to Flinders’ estimates. Iron ore consumption in China, the biggest buyer, will double by 2020 from 2008 levels, according to Rio Tinto Group, the world’s second-largest exporter.
MMK has reserves of about $300 million and credit facilities and will finance the acquisition itself, Flinders’ lawyer Ian Jackman told the judge today.
MMK offered 30 cents a share for Flinders, a 93 percent premium over Flinders’s one-month average share price prior to Nov. 25 bid, Jackman said.
The case is The Application of Flinders Mines Ltd. SAD1/2012. Federal Court of Australia (Sydney)
--Editors: Andrew Hobbs, Keith Gosman
To contact the reporter on this story: Joe Schneider in Sydney at firstname.lastname@example.org
To contact the editor responsible for this story: Douglas Wong at email@example.com